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Luck brightens WA’s economic scorecard

MORE through good luck than good management, WA’s economy has been one of Australia’s brightest stars.

A competitive Australian dollar and low inflation and interest rates, together with an abundance of natural resources have combined to make WA’s economy boom, attracting new business investment from interstate and overseas.

WA’s final demand growth and business investment has been one of the highest among all the States.

During the December quarter, State final demand grew 0.8 per cent or 7.7 per cent for the year and business investment, spurred on by the $1.4 billion expansion of the North West Shelf grew 35.1 per cent during the 2001 year. This was helped further by the $380 million Boddington gold mine expansion and Robe River’s $630 million development of the West Angelas iron ore deposit.

WA’s economic results sparkle when compared with Australia’s 4.1 per cent growth in economic activity for the 2001-year and the 5.1 per cent growth in business investment or the US which has been in recession since March 2001.

New South Wales and Victoria, with their strong emphasis on manufacturing, achieved growth of just 3.1per cent and 5.1 per cent respectively during the year.

WA’s strong growth has also been flowing through into employment figures.

Year-on-year employment growth in WA has been in positive territory since late 2000. For the year to April 30, employment grew 1.1 per cent, though declining 0.2 per cent during April.

The unemployment rate, having peaked at 7.9 per cent mid-2001 fell to 5.6 per cent in March before settling back to 6.3 per cent in April. Australia’s unemployment rate meanwhile has remained at 6.8 per cent for the past three quarters.

However, while economists see business investment as the chief driver of growth in 2001, WA will be counting on strong consumer demand to maintain growth.

Institute for Research into International Competitiveness director Peter Kenyon, outlining his views in the WA Quarterly Bulletin of Economic Trends, predicts a decline in WA business investment by the third quarter of this year.

In the year to March 2003 business investment is expected to be pegged back by 4.9 per cent. Likewise, the Chamber of Commerce and Industry, in its WA Economic Review, expects business investment to fall, before experiencing an upsurge.

The Chamber expects business investment to manage only 2.75 per cent growth for the 2002 year and 17 per cent growth in the year to June 2003 while Australian growth prospects are just 4.25 per cent for the 2002-03 year.

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